Rising Temperatures & Falling Water Tables Raising Food Prices: Record World Grain Harvest Shortfall of 83 Million Tons in Prospect

Lester R. Brown

On Monday, August 12th, the U.S. Department of Agriculture (USDA) released an updated estimate of the world grain harvest for 2002, reducing it to 1,821 million tons from July's estimate of 1,878 million tons. With world grain consumption this year projected at 1,904 million tons, this lower harvest leaves a shortfall of 83 million tons.

The precipitous drop in the month-to-month estimated harvest triggered an accelerated rise in prices of wheat and corn in world markets. In recent months, wheat futures for December delivery have climbed from $2.83 a bushel to $3.70--a gain of 31 percent. Corn prices have climbed by a similar amount. And this is only the beginning. As grain prices climb, so too will prices of the products derived from grain, such as bread, breakfast cereals, pasta, and livestock products, including meat, milk, and eggs.

This is the third consecutive year in which world grain production has fallen short of consumption. In 2000, the shortfall was 35 million tons; in 2001, it was 31 million tons. Combined, these three annual deficits--totaling 149 million tons--have dropped grain stocks to the lowest level in three decades.

At the end of this crop year, world wheat carryover stocks--the amount in the bin as the new harvest begins--are estimated at 23 percent of annual consumption, the lowest in 28 years. For rice, carryover stocks amounted to 28 percent of annual consumption, the lowest in 18 years. For corn, the third of the leading cereals, carryover stocks are less than 15 percent of annual consumption, the lowest in the 40 years since recordkeeping began.

Three key factors have contributed to the reduced harvest in 2002: low grain prices at planting time, crop-withering temperatures, and falling water tables. Several years of low grain prices have discouraged farmers from investing in land improvement and other production-enhancing investments. They have also forced farmers to stop planting crops on marginal land.

At the same time, farmers in key food-producing regions were confronted with some of the highest temperatures on record--temperatures that stressed crops and reduced yields. The average global temperatures for September and November 2001 were the highest ever recorded for those two months in 134 years of recordkeeping. Then December, January, February, April, and May posted their second highest temperatures on record. And July 2002 was the fourth hottest ever. High temperatures combined with low rainfall in many countries to create drought conditions.

Reports of heat-stressed crops have been common in the top three food producers--the United States, India, and China. Even irrigated crops suffer from high evaporation losses and heat stress. When temperatures range above 32 degrees Celsius (90 degrees Fahrenheit), crop yields can suffer.

The corn plant, a highly productive crop that accounts for 70 percent of the U.S. grain harvest, is particularly vulnerable to heat. In a heat-stressed field, leaves curl in order to reduce moisture loss through evaporation. Under these conditions, photosynthesis declines and the plant switches from a growth path to a survival mode, reducing yields.

India's harvest has also suffered from high temperatures, including a heat wave with temperatures reaching 45 degrees Celsius (113 degrees Fahrenheit) in May that killed more than a thousand people. In addition, this year's monsoon was late and weaker than normal. Less rainfall has lowered India's estimated rice harvest from 90 million to 80 million tons.

Meanwhile, water tables are falling, as farmers pump more water to meet the growing world demand for food. Water tables are now dropping in key farming areas of China, India, and the United States. In China, 70 percent of the grain comes from irrigated land. In India, the figure is 50 percent, and in the United States, almost 20 percent.

USDA reports that in parts of Texas, Oklahoma, and Kansas, the underground water table has dropped by more than 30 meters (100 feet). As a result, farmers in some states in the southern Great Plains have discovered their pumps are pumping air instead of water. Even states like Nebraska and Colorado, where much of the corn is irrigated, are facing poor harvests this year. (For additional examples of falling water tables, see Eco-Economy Update "Water Deficits Growing in Many Countries".)

Falling water tables are directly affecting harvests in scores of countries, including, notably, that of wheat in China. After peaking at 123 million tons in 1997, the wheat harvest there has fallen in four of the last five years, coming in at 92 million tons this year. Farmers in the northern half of China, where most of the wheat is produced, depend on irrigation to supplement rainfall. When they lose irrigation water from aquifer depletion, or the diversion of water to cities, their yields drop. In the region around Beijing, for example, farmers are banned from using the reservoirs since all the water is needed to satisfy the city's fast-growing needs.

Can the world's farmers bounce back from an 83-million-ton deficit, rebuild depleted stocks, and provide adequately for 80 million additional people a year? In the past, higher grain prices have typically led to an expansion of planted area and higher yields. How much more the planted area can expand remains to be seen. After peaking in 1981 at 732 million hectares, the world grain area has fallen to 660 million hectares. The United States retired roughly 10 percent of its cropland in the late 1980s under a Conservation Reserve Program as farmers were paid to take highly erodible land out of production. China is in the process of planting one tenth of its grainland to trees during this decade as it tries to halt advancing deserts.

The one substantial remaining area of frontier expansion is in the Brazilian cerrado, a vast semiarid, savannah-like region to the south and west of the Amazon basin. But this land is of intermediate fertility, requiring heavy applications of lime to reduce acidity and of fertilizer to maintain the productivity of the leached soils.

Boosting land productivity is now much more difficult. In earlier times, higher grain prices led to an expansion of irrigation, but with aquifer depletion so widespread this does not seem likely. Farmers also respond to higher prices by applying more fertilizer, but with use already quite high, even in developing countries, it is more difficult to expand fertilizer use profitably.

The world is now facing a challenging situation. It has been relatively easy to recover from past annual harvest shortfalls of 20, 30, or 40 million tons. But with an 83-million-ton shortfall, recovery may not be a simple proposition. If farmers are faced with even higher temperatures in the years ahead, as projected, they may have difficulty overcoming this year's huge shortfall, rebuilding stocks, and providing for the 3 billion people to be added by 2050. Perhaps now the world will give population growth and climate change the attention these issues deserve.